From Buddha to Mahakashyapa
When Mahakayashapa smiled as the Buddha silently held up a single flower at Vulture Peak, the Buddha turned to Mahakashyapa and smiled in return.
In Chan legend it is said that the Buddha then said: "I have the true Dharma eye, the marvelous mind of nirvana, the true form of the formless, and the subtle Dharma gate, independent of words and transmitted beyond doctrine. This I have transmitted to Mahakashyapa."
In so doing, the Buddha entrusted the teaching of the Dharma
What exactly was transmitted? As the Buddha said, there can be no answer either in the form of words or reference to the teachings. If one says that what is transmitted is enlightenment, then this makes no sense either, because enlightenment must be realized by the individual and cannot be transmitted by a master, not even a buddha.
When Mahakashyapa responded to the Buddha's gesture with a smile (and perhaps a nod), whatever transmission there was took place in that instant, and the Buddha's response was simply to acknowledge that. Understood this way, then transmission becomes a mind-to-mind recognition between a master and disciple that the disciple has realized the "true Dharma eye." In Chan, this exchange between a master and a disciple is sometimes called the "mind-seal," or yinke (Jap. inka).
By concluding, "This I have entrusted to Mahakashyapa," the Buddha established Dharma lineage in the form of "trust;" the Buddha was trusting Mahakashyapa to properly transmit (teach) the Dharma.
There is thus a private as well as public aspect to Dharma transmission. On the one hand, there is the private mind-to-mind recognition between master and disciple, and then there is the designation of the disciple a Dharma heir. Even though the story of the Buddha and the flower may be apocryphal, it does symbolize the meaning of transmission as understood in the Chan tradition.
In Dharma transmission no "thing" is transmitted; certainly not the Dharma, which the receiver of transmission has already realized through their own efforts. What is transmitted is the recognition by the master that the disciple not only has realized awakening but is ready to become an heir in the Dharma lineage. Transmission is not just a matter of granting the disciple permission to teach Chan, since the disciple may already be a teacher with students of their own. Rather, it grants the disciple the authority to teach Chan as a representative of the master, as well as of the lineage.